China Scale.....

Followers of Hyro will be aware that we recently announced that we are in negotiations with European services organisation Getronics NV to acquire their Application Services Business in mainland China, Hong Kong and Macau. This isn't the place to talk about that deal, but the work we have been doing in this area has highlighted the exciting scale and growth opportunities in the Chinese digital services market.

The first observation is the scale of the the online user market (and specifcally the level of broadband penetration) in both China and Australia. The "Broadband Penetration" chart to the right shows two interesting statistics; while the number of households with broadband access in China will run at about 10x the number here in Australia by 2011 (and be up around 80 million households), the level of penetration will still only be around 25% of households.

Mapping this level of broadband access is the expected rate of growth in the online advertising market over a similar time period. Zenith Optimedia (who have lower estimates for the Australian online advertising market than most local analysts). The Australian market for online advertising is expected to grow to around US$2 Billion by 2009, while the China online advertising market is likely to be nudging US$18 Billion in the same timeframe.

Lots of commentators talk about the size of the China market. For me, the scale is matched in terms of exicting potential by the fact that many Chinese businesses (and international businesses entering the China market) are doing so with digital services as major parts of their strategies. It is another example of emerging markets leap-frogging generations of traditional technology and business models to ake the very best of contemporary practices.

It will be very interesting and exciting to continue to watch the emergence of the China digital services market. This is a very real example of this exciting evolution that is changing the world.